Euro Responds To Fed Rate Cut
By Colin Twiggs
February 5, 2008 1:30 a.m. ET (5:30 p.m. AET)
The recent Fed rate cut boosted the euro, but had the opposite effect on gold and crude oil.
Spot gold retraced to test support at $900. A rise above Monday's high would indicate that support has held and the metal is likely to test the target of 900+(900-850)=$950. Failure of support is not expected — and would signal a test of $850. Primary support is at $775 and remains unlikely to be tested.
March 2008 Light Crude is testing primary support at $87/barrel. Breakout above $92.5 would signal another test of $100. Failure of support at $87 is not expected — and would warn that crude has started a primary down-trend.
The euro is testing resistance at $1.49. Continued narrow consolidation below this level would be a strong bull signal. In the medium term, breakout above $1.49 (and the key psychogical level of $1.50) would offer a target of 1.50+(1.50-1.43)=$1.57. Downward breakout below $1.43, while not expected, would signal a primary down-trend.
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The dollar continues in a downward trend against the yen, with a long term target of 100. The short-term pennant favors another down-swing to test the lower border of the trend channel: watch for a breakout below 106.
The Australian dollar has formed a broadening bottom
(megaphone) pattern against the greenback. Breakouts may occur
in either direction and offer reliable signals — as do
failed (partial) up/down-swings. A rise above $0.91 would
indicate a test of $0.94, while a fall below $0.85 would signal
continuation of the down-trend. Today's (0.25 per cent) rate
rise by the RBA is expected to boost demand for the Aussie,
favoring an upside breakout.
The Australian dollar rallied strongly since respecting long-term support at 90 against the yen, but only a rise above 100 would signal reversal to an up-trend.
A wise man should have money in his head, but not in his
~ Jonathan Swift (1667 - 1745)
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